On The Choice Of The System Of State-owned Commercial Banks

In November 1999, with abolishment of the 66 years implemented the Glass-Steagall Act and adoption of the Gramm-Leach-Bliley Act in replacement, the United States has legally ensured the establishment of financial universal operation model and has declared the world has entered into a new era of universal operation. What shall we do when facing the international trend of universal operation? Which operation model shall China's state-owned commercial banks adopt? This is a very important issue for China in its financial restructuring process, and it is also the focus of this paper. On the basis of static theoretical analysis and comparison between the two operation models of commercial banks, the paper then makes a dynamic analysis on the historic evolution process of the operation system of commercial banks, through the study on the operation system evolution process of commercial banks in the countries of Germany, the US, Japan, the UK and Korea etc, the paper finds that though these countries adopted different operation models in the beginning period, an unanimous decision has been finally reached to adopt universal operation system, which has demonstrated the development towards universal operation is an inevitable general trend. Based on the above analysis, this paper has reviewed the business segregation system in China through analysis on the background information of the system's formation and the system's equilibrium status in terms of the supply and demand, and reached a conclusion that the current operation system of China's state-owned commercial banks is not in equilibrium, a practical and effective option to achieve equilibrium is to replace the current business segregation system with universal operation system, and universal operation system will be the ultimate ideal operation model for China's state-owned commercial banks. On the basis of analysis on the disadvantageous factors in implementing universal operation in China, the paper then points out transformation from the current business segregation to universal operation should be a step by step process with restrictive factors existing in the fields of politics, economy, legislation, science and technology development level. And finally the paper has proposed a progressive developing strategy for China's state-owned commercial banks during the transformation period from business segregation to universal operation, which is also a creative viewpoint in this paper. The specific policy suggestions include:1. Under the current framework of business segregation and separate organization settings, business cooperation shall be allowed between commercial banks and security companies, commercial banks and insurance companies;2. Universal operation shall be permitted for financial groups in the form of holding companies;3. Restrictions on universal operation shall be lifted and comprehensive universal banking groups shall be allowed to set up.